(a) The rate of tax shall be one percent (1%) above the state sales tax rate as levied by the General Assembly, by initiatives enacted by the people of the State of Arkansas, and by amendments to the Arkansas Constitution if:
(1) An Arkansas city or incorporated town is divided by a state line from an incorporated city or town in an adjoining state;
(2) The city or town in the adjoining state is of greater population than the Arkansas city or town;
(3) A tax imposed in the adjoining state is in the nature of a selective sales tax or limited to specific items as a special excise tax; and
(4) The border city has voted to levy an additional one percent (1%) gross receipts tax in the city in lieu of paying state income taxes by individuals who are residents of the city as authorized by § 26-52-601 et seq.
(b) With respect to a motor vehicle sold in any such city or incorporated town, the exemption authorized in this section shall be applicable only to a motor vehicle sold to and registered by a bona fide resident of such an Arkansas city or incorporated town and shall not be applicable to a motor vehicle sold to a nonresident.
(c)
(1) The Director of the Department of Finance and Administration shall require any person claiming this exemption to file a sworn statement in writing that the person is a resident of that city or incorporated town and such other information as the director may determine is necessary to establish the residence of the person.
(2) Upon conviction, a person filing a false statement or otherwise falsely obtaining or assisting another person to falsely obtain the benefits of the exemption authorized in this section is guilty of a violation and shall be fined in a sum of not less than one hundred dollars ($100) nor more than five hundred dollars ($500).
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